The National Microfinance Bank will have to refund would-be investors more than Sh37 billion following oversubscription of its initial public offer (IPO).

Preliminary reports on the IPO, which opened on August 18 and closed on Monday, indicate that it has been oversubscribed by over 42 per cent.

The Consolidated Holding Corporation announced on Tuesday that a total of Sh100 billion was recorded from the sale of the State's 21 per cent stake in the bank. The Government remained with a 30 per cent stake following the floatation of 105 million shares to the public at Sh600 per share.

This means that about Sh37 billion will have to be refunded to the IPO subscribers as capital markets rules require.

This is different from unregistered IPOs, such as that of Dar es Salaam Community Bank, which was oversubscribed by 350 per cent, leading to an application to the Capital Markets and Securities Authority (CMSA) for the absorption of the entire proceeds.

It was, however, not immediately clear whether the Government would allow its remaining 30 per cent shares in NMB to be sold, although it had earlier announced that it would float the rest of its stake in the future.

The oversubscription was in line with projections by most stockbrokers.

However, NMB's record falls short of the Tanzania Portland Cement&#65533;s in percentage terms.

The firm floated 53.9 million shares with the goal of raising Sh23.4 billion in 2006, but the offer was oversubscribed by 350 per cent, forcing the company to refund would-be investors Sh70 billion.

Brokers interviewed in Dar es Salaam yesterday said they had experienced high turnout, although not so much as previously expected. Some brokers said the delay in floating the shares had discouraged investors, particularly those in the low-income bracket.

Stockbrokers at the Dar es Salaam Stock Exchange noted that the initial price of Sh600 per share was the highest of any IPO at DSE.

According to the NMB IPO prospectus, the announcement of the basis of allotment criteria and crediting of shares to the Central Depository System is scheduled for October 8.

Refund distribution and distribution of depository receipts will take place on October 22 before the listing and commencement of share trading at the secondary market begins towards the end of October.

Ms Dono Sumari, an official of Solomon Stockbrokers Limited, an IPO authorised agent, said all receiving agents were until Tuesday continuing with the compilation of share sales.

"We can't estimate how the IPO has performed because it is too early and data is still being compiled," she told this newspaper on Tuesday.
She added that the share sales trend in Dar es Salaam was high, especially among individual investors who were allotted 80 per cent of the 16 per cent of shares allotted to the general public.

"Although the IPO experienced some delays, people have shown that they are now knowledgeable as far as stock markets are concerned," Ms Sumari said.

However, analysts have said a significant number of people in the low-income bracket missed out on the IPO because most of them are currently facing economic hardships caused by high commodity prices.
However, an NMB official, who did not want to be named, said the response was generally positive.

The National Microfinance Bank will have to refund would-be investors more than Sh37 billion following oversubscription of its initial public offer (IPO).

Preliminary reports on the IPO, which opened on August 18 and closed on Monday, indicate that it has been oversubscribed by over 42 per cent.

The Consolidated Holding Corporation announced on Tuesday that a total of Sh100 billion was recorded from the sale of the State's 21 per cent stake in the bank. The Government remained with a 30 per cent stake following the floatation of 105 million shares to the public at Sh600 per share.

This means that about Sh37 billion will have to be refunded to the IPO subscribers as capital markets rules require.

This is different from unregistered IPOs, such as that of Dar es Salaam Community Bank, which was oversubscribed by 350 per cent, leading to an application to the Capital Markets and Securities Authority (CMSA) for the absorption of the entire proceeds.

It was, however, not immediately clear whether the Government would allow its remaining 30 per cent shares in NMB to be sold, although it had earlier announced that it would float the rest of its stake in the future.

The oversubscription was in line with projections by most stockbrokers.

However, NMB's record falls short of the Tanzania Portland Cement&#65533;s in percentage terms.

The firm floated 53.9 million shares with the goal of raising Sh23.4 billion in 2006, but the offer was oversubscribed by 350 per cent, forcing the company to refund would-be investors Sh70 billion.

Brokers interviewed in Dar es Salaam yesterday said they had experienced high turnout, although not so much as previously expected. Some brokers said the delay in floating the shares had discouraged investors, particularly those in the low-income bracket.

Stockbrokers at the Dar es Salaam Stock Exchange noted that the initial price of Sh600 per share was the highest of any IPO at DSE.

According to the NMB IPO prospectus, the announcement of the basis of allotment criteria and crediting of shares to the Central Depository System is scheduled for October 8.

Refund distribution and distribution of depository receipts will take place on October 22 before the listing and commencement of share trading at the secondary market begins towards the end of October.

Ms Dono Sumari, an official of Solomon Stockbrokers Limited, an IPO authorised agent, said all receiving agents were until Tuesday continuing with the compilation of share sales.

"We can't estimate how the IPO has performed because it is too early and data is still being compiled," she told this newspaper on Tuesday.
She added that the share sales trend in Dar es Salaam was high, especially among individual investors who were allotted 80 per cent of the 16 per cent of shares allotted to the general public.

"Although the IPO experienced some delays, people have shown that they are now knowledgeable as far as stock markets are concerned," Ms Sumari said.

However, analysts have said a significant number of people in the low-income bracket missed out on the IPO because most of them are currently facing economic hardships caused by high commodity prices.
However, an NMB official, who did not want to be named, said the response was generally positive.